Wells Fargo Asset Management (WFAM) has acquired a minority ownership stake in privately held The Rock Creek Group (Rock Creek), a Washington, DC-based fund of hedge funds firm with approximately USD7 billion in assets under management. The financial terms of the transaction have not been disclosed.
Rock Creek provides commingled and customised multi-manager alternatives and long-only investment solutions to institutional clients. The firm designs and implements customised fund of hedge funds and emerging market portfolios through top-down asset allocation and manager selection, leveraging Rock Creek’s sophisticated, proprietary analytics platform Rock Creek Solutions.
Rock Creek was established in 2002 by Afsaneh Beschloss, who serves as President and Chief Executive Officer of the firm. Previously, Beschloss was the Treasurer and Chief Investment Officer of the World Bank, responsible for managing USD65 billion in assets and a USD30 billion funding strategy, as well as USD160 billion in derivatives and structured products. In this position, she was instrumental in developing the World Bank’s portfolio of alternative investments and private equity investments.
“We are pleased to be partnering with one of the world’s leading and most respected diversified financial services firms,” Beschloss says. “We believe this strategic partnership with Wells Fargo Asset Management will further enhance our ability to offer industry leading solutions and services to our clients, while maintaining our corporate culture and institutional investment process.”
WFAM is making this investment through the Affiliated Managers Division, which is headed by Tom Hoops and employs a multi-boutique asset management model. The 50-member Rock Creek team will remain independent with no change in its structure, investment philosophy or process, team and investment committee composition, or location; all day-to-day management will reside with the current Rock Creek team, which will continue to be led by Beschloss.
WFAM will take a minority ownership stake, with the Rock Creek management team and employees having a majority equity stake in the firm. This partnership further increases the long-term alignment of interests between Rock Creek and its clients as it involves a broadening of the equity ownership among Rock Creek’s team. WFAM may acquire additional ownership interests in Rock Creek through long-term put and call arrangements in subsequent years, subject to customary conditions.2
Michael Niedermeyer (pictured), Chief Executive Officer of Wells Fargo Asset Management, says: “We are very excited to be partnering with The Rock Creek Group, a well-respected and growing global investment firm with an outstanding reputation in the hedge fund industry. Our clients have expressed their desire for increased alternative investment solutions, and this partnership allows us to meet those needs. Rock Creek’s expertise across asset classes and in asset allocation is complemented by their strong portfolio transparency, commitment to risk management, and enhanced reporting and analytics – capabilities that not only serve their clients well but also closely align with our philosophy and culture."
Lazard acted as financial advisor to Rock Creek on the transaction and Sullivan & Cromwell LLP acted as legal counsel to Rock Creek and K&L Gates LLP acted as legal counsel to Wells Fargo Asset Management.